ICICI Securities research report on Jubilant Foodworks
Three positives from 1QFY24: (1) sequential improvement in LFL ADS (led by new product launches in value range and outperformance in the delivery business), (2) continuing traction in the loyalty program (enrolments up 24% YoY, 48% revenue share) and (3) on-track Popeyes retail expansion (to add 30-35 in FY24). That said, we reckon the benefits of strategic interventions (store re-imagination – already implemented at ~76% stores, aggressive new launches in value segment, 20-minute delivery) to address the slowdown in dine-in business have been slower than expected due to discretionary slowdown. On geographical expansion, we do note that JUBI has turned conservative: ventured into 7 new cities (added 79 stores) over last two quarters (vs 50 new cities during Q1-Q3 FY23). BUY.
Outlook
We have cut our FY24-25E earnings estimates by ~6%, modelling revenue / EBITDA / PAT CAGR of 17 / 19 / 29 (%) over FY23-25E. Maintain BUY with a revised DCF-based target price of INR 590 (was INR 600).
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